Table of Content
Is Shopify Payments better than PayPal?
For most US stores, yes, as the primary processor. Shopify Payments adds no Shopify transaction fee and costs $3.20 on a $100 Basic-plan card sale, against PayPal’s published $3.98 for its own checkout. Offer PayPal as an extra option, because it is exempt from Shopify’s third-party fee when Shopify Payments is your primary provider.
The short version
- The biggest difference is a fee you may not see. Any third-party gateway adds a Shopify transaction fee of 2% on Basic, 1% on Grow, 0.6% on Advanced or 0.2% on Plus. Shopify Payments, used alone, adds none.
- On a $100 sale the gap is real. Shopify Payments on Basic costs $3.20. PayPal’s published checkout rate is $3.98 before any Shopify fee.
- Mixing providers has a catch. Shopify says Shop Pay and local payment method transactions can carry a 1.25% premium on top of standard Shopify Payments rates when a third-party provider is also in use.
- The cheapest option can hold your money. Shopify Payments can place a reserve on a portion of your sales, typically after high refunds, disputes or a sudden spike.
- Payouts take 3 business days in the US, and a chargeback costs $15, returned if you win.
- A second gateway is a deliberate choice. Add one for a specific reason: a country, a bank relationship or a business Shopify Payments will not take.
The 7 differences between Shopify Payments and PayPal
Most Shopify Payments vs PayPal comparisons stop at the card rate. That is the least interesting difference. The seven below decide what you actually pay and how safe your cash flow is. The comparison applies to any third-party gateway, with PayPal as the example because it is the one store owners ask about most. It covers the US, where Shopify’s documentation says PayPal Express Checkout is not available and PayPal reaches your store as a wallet through Shopify Payments.
| # | Difference | Shopify Payments | Third-party gateway such as PayPal |
|---|---|---|---|
| 1 | Fee Shopify adds | None when it is your sole provider | 2%, 1%, 0.6% or 0.2% by plan, unless an exemption applies |
| 2 | Card rate on a $100 sale | $3.20 on Basic (2.9% + 30 cents) | $3.98 at PayPal’s published checkout rate (3.49% + 49 cents) |
| 3 | Mixing providers | Shop Pay and local methods can carry a 1.25% premium when a third-party provider is also in use | PayPal is exempt from Shopify’s fee when Shopify Payments is the primary provider |
| 4 | Payout timing | 3 business days in the US, with pauses during account reviews | Set by the gateway. Check its schedule. |
| 5 | Reserves and holds | Shopify can reserve a portion of sales for a set period | Each gateway has its own policy. Ask before you commit. |
| 6 | Chargebacks | $15 in the US, returned if you win | Set by the gateway, and you handle disputes in its dashboard |
| 7 | Where it works and where you manage it | Only in supported countries, managed inside your Shopify admin | Often available more widely, managed in a second dashboard |
Shopify figures from Shopify’s pricing and help pages, checked October 7, 2026. PayPal’s rate from PayPal’s US business fees page, checked October 7, 2026. US card rates for Grow, Advanced and Plus are 2.7%, 2.5% and 2.25%, each plus 30 cents.
1. The fee Shopify adds
Shopify charges a transaction fee on every order processed through a third-party or alternate gateway. It is separate from the gateway’s own charge and added to it. Shopify’s help documentation says that when Shopify Payments is your sole payment provider, there are no third-party transaction fees. The PayPal exception is narrow: it applies when you elect Shopify Payments as your primary provider. Our guide to Shopify payment gateway integration covers how to add each route.
2. The card rate
Shopify Payments fees on Basic are 2.9% plus 30 cents for online card sales. PayPal publishes 3.49% plus 49 cents for its standard checkout in the US. On a $100 sale that is $3.20 against $3.98. The rate is not the whole picture, because the Shopify fee in difference 1 comes on top when a third-party gateway is your main processor.
3. What happens when you mix providers
Many stores run Shopify Payments for cards and add other methods beside it. That is allowed, and it is often sensible. Shopify’s documentation adds a condition to know about: transactions processed by Shopify Payments, such as Shop Pay and local payment methods, are charged at standard Shopify Payments rates plus a 1.25% premium when a third-party provider is also in use. Check Shopify’s cost page for the exact conditions on your setup before you add a gateway you do not need.
4. Payout timing and holds
Shopify’s documentation gives a standard settlement time of 3 business days for the US. Payouts can be temporarily held while your account is under review, and changing your payout bank account pauses payouts for 3 to 5 business days while Shopify verifies it. Plan cash flow around that, especially when you change banks.
5. Reserves
This is the difference that surprises merchants most. Shopify defines a reserve as a temporary hold on a portion, in some cases all, of the transactions processed through Shopify Payments for a set period. It says reserves manage risks such as chargebacks and refund volumes. Common triggers include subscription businesses, high dispute activity, high refund rates, industries with long fulfillment times, and sudden sales spikes.
Reserves run for a defined period, with 120 days given as an example. Before it ends, Shopify reviews the account and decides whether to keep, reduce or raise the reserve. You can reply to the email that explains the terms to appeal, and when requirements are met the reserve is removed automatically. If your business matches those triggers, ask about reserves before you build your cash flow on Shopify Payments.
6. Chargebacks
With Shopify Payments in the US, a chargeback costs $15, and Shopify says the fee is returned if you win. You typically have 7 to 21 days to build your response after you are notified. A third-party gateway sets its own dispute fee and deadlines, and you work in its dashboard rather than in Shopify.
7. Availability and where you manage it
Shopify Payments is available only to stores in certain countries and regions, and it asks for documentation and two-step authentication before it activates. A third-party gateway can fill the gap where Shopify Payments is unavailable. The trade-off is a second dashboard for payouts, disputes and reconciliation, which is more work every month.
Shopify payment gateway fees on a $100 sale, side by side
| Route (Basic plan) | Processor charge | Shopify fee | Total on $100 |
|---|---|---|---|
| Shopify Payments only | $3.20 | $0.00 | $3.20 |
| Gateway at PayPal’s published checkout rate, as a third-party route | $3.98 | $2.00 | $5.98 |
| PayPal offered beside Shopify Payments as primary | $3.98 | $0.00 (exempt) | $3.98 |
Our arithmetic from the published rates above. The second row assumes the gateway charges PayPal’s published rate and that Shopify’s 2% third-party fee applies. Real results depend on card type, country and your agreement with the gateway.
The first and second rows are the cost of choosing a third-party gateway as your main processor, which is $2.78 more per $100. At 400 orders of $100 a month, that is $1,112 a month. The third row shows why Shopify Payments as primary, with PayPal as an extra, is the usual setup: you keep the cheap default and still give buyers the option they trust.
How to avoid Shopify transaction fees
Shopify’s own wording is the answer: use Shopify Payments as your sole payment provider and there are no third-party transaction fees. If that is not possible, these steps reduce the bill.
- Use Shopify Payments as your primary provider if your country and business type allow it.
- Add a second gateway only for a stated reason. Every extra gateway can add the third-party fee to the orders it processes.
- Check the 1.25% premium before mixing. If you offer Shop Pay or local methods beside a third-party provider, confirm the premium on Shopify’s cost page.
- Compare plans against your volume. A higher plan lowers the third-party fee, and the next section shows where that pays off.
- Use the exemption. PayPal transactions are exempt from the third-party fee when Shopify Payments is your primary provider.
When upgrading your plan pays for itself
If you must use a third-party gateway, a higher plan reduces Shopify’s fee on it. The table compares Basic and Grow on annual billing. Grow costs $50 a month more ($79 against $29) and halves the fee from 2% to 1%.
| Monthly sales on the gateway | Basic: plan + 2% fee | Grow: plan + 1% fee | Monthly difference |
|---|---|---|---|
| $5,000 | $29 + $100 = $129 | $79 + $50 = $129 | Even |
| $20,000 | $29 + $400 = $429 | $79 + $200 = $279 | Grow saves $150 |
| $50,000 | $29 + $1,000 = $1,029 | $79 + $500 = $579 | Grow saves $450 |
Our arithmetic from annual-billing plan prices and Shopify’s third-party fee rates, checked October 7, 2026. It counts only the plan and Shopify’s third-party fee, not the gateway’s own charges.
The break-even is $5,000 a month in third-party sales. Below that, stay on Basic. Above it, the plan upgrade pays for itself on the fee alone, before you count the other Grow features. For what a full store costs, our guide to setting up a Shopify store shows the plan, domain and theme lines.
Shopify Payments alternatives: when a third-party gateway is the right call
The fee is not a reason to avoid one when you have a real reason to use it. A third-party gateway is the right choice in these cases:
- Shopify Payments is not available in your country. It is limited to certain countries and regions, so there may be no alternative.
- Your business matches a reserve trigger. Subscription businesses, long-fulfillment businesses and stores with high refund rates may prefer a gateway whose terms they have read and accepted.
- You need an existing merchant account or bank relationship. Some businesses must keep a specific acquirer.
- You sell something Shopify Payments will not underwrite. Eligibility depends on business type and documentation.
If none of these applies, you are paying a fee for a preference. Our guide to choosing the right payment gateway goes further into weighing processors against each other.
Shopify Payments vs Stripe
The two are closely related. Shopify Payments is powered by Stripe. If you connect your own Stripe account as a third-party provider, the processing is similar, but Shopify’s third-party fee applies on top. The reasons to connect Stripe directly are Stripe’s own dashboard and reporting, or being outside a Shopify Payments country. If neither applies, the built-in route costs less.
If your setup is more complex than a single gateway, with custom checkout logic, an ERP sync or a regional method, that is development work. Our Shopify development services team can tell you early whether it is feasible on your plan.
Frequently Asked Questions
How do I avoid Shopify transaction fees?
Use Shopify Payments as your sole payment provider. Shopify says that when you do, there are no third-party transaction fees on orders. If you need another gateway, offer PayPal alongside Shopify Payments, because PayPal transactions are exempt when Shopify Payments is your primary provider.
Why is Shopify charging me transaction fees?
Shopify charges a transaction fee on orders processed through a third-party or alternate gateway, or when your store does not have Shopify Payments activated. The rate is 2% on Basic, 1% on Grow, 0.6% on Advanced and 0.2% on Plus. Check Settings, Payments to see which providers are active.
Why is Shopify charging me $40?
The charge could be the monthly subscription, since Basic on monthly billing is $39, or an app charge or a transaction fee. Open your Shopify bill and read the charge breakdown to see which category it belongs to. Shopify Payments card fees are deducted from payouts rather than billed.
How much does Shopify take from a $100 sale?
With Shopify Payments on Basic, a $100 online card sale costs $3.20, which is 2.9% plus 30 cents. If you use a third-party gateway instead, Shopify adds $2.00 on Basic, $1.00 on Grow, $0.60 on Advanced or $0.20 on Plus, on top of the gateway’s own charge.
Is Shopify Payments worth it?
For most stores in a supported country, yes. It adds no third-party fee, keeps payouts and disputes in one dashboard, and costs less than most third-party routes on the same sale. The main risk is a reserve, so check whether your business matches the triggers Shopify lists before you rely on it.
Is Shopify Payments better than PayPal?
As the main processor, usually yes: it costs less on the same sale and adds no Shopify fee. PayPal is still worth offering as an extra checkout option, because it is exempt from the third-party fee when Shopify Payments is your primary provider. In the US, PayPal Express Checkout is not available, so PayPal arrives through Shopify Payments.
What is a Shopify Payments reserve?
A reserve is a temporary hold on a portion, sometimes all, of the transactions processed through Shopify Payments for a set period. Shopify uses reserves to manage risks such as chargebacks and refunds. Common triggers include subscription businesses, high disputes, high refund rates, long fulfillment times and sudden spikes in sales.
How long do Shopify Payments payouts take?
Shopify gives a standard settlement time of 3 business days for the United States. Payouts can be temporarily held during an account review, and changing your payout bank account pauses payouts for 3 to 5 business days while Shopify verifies the new account.
What is the Shopify Payments chargeback fee?
In the United States a chargeback costs $15 with Shopify Payments, and Shopify says the fee is returned if you win the dispute. You usually have 7 to 21 days after notification to build your response, so check your email and admin for dispute notices.
Is Shopify Payments the same as Stripe?
Not exactly. Shopify Payments is powered by Stripe but is a separate Shopify product with Shopify’s pricing and dashboard. Connecting your own Stripe account as a third-party provider adds Shopify’s third-party transaction fee on top of Stripe’s charges.
Bottom Line
Shopify Payments vs PayPal is really a comparison of fee structures. Shopify Payments, used as your sole provider, adds no Shopify fee and costs $3.20 on a $100 Basic sale. A third-party gateway adds Shopify’s fee of 2% to 0.2% on top of its own charge, and mixing providers can add a 1.25% premium on Shop Pay and local methods.
Make Shopify Payments your primary processor if your country and business allow it, and offer PayPal beside it. Choose a third-party gateway on purpose, for availability, a reserve you cannot accept or a bank relationship you must keep. If you want help scoping a payment setup that does not fit the standard options, our Shopify development services team can review it before you commit.
